Exam 12: Accounting for Hospitals and Other Health Care Providers

Which of the following is not a required statement of a private not-for-profit hospital?

A private sector,not-for-profit hospital received a pledge of $150,000 in 2013 to be used for a building to be constructed in 2014 but contingent on the hospital being able to raise an equivalent amount from other donors.As of the end of 2013,half the amount had been raised from other donors.In 2014,the hospital raised the amount from other donors.The donor gave the $150,000 to the hospital in 2014 and the building was completed in 2014.In which year should the hospital recognize the $150,000 from the pledge?

Health care organizations that are privately owned and operated to provide a return to investors follow GASB standards.

A "performance indicator" is required in the Statement of Operations for health care entities.Which of the following must be reported below that performance indicator?

Which of the following is not true regarding accounting and financial reporting for private not-for-profit hospitals?

Government hospitals are typically considered special purpose entities engaged in business-type activities under GASB Statement 34.

What is the basis of accounting for hospitals and other health care organizations,and what organizations are responsible for setting Category A GAAP?

Government owned hospitals follow FASB Statements 116 and 117.

Voluntary health and welfare organizations raise a significant amount or nearly all of their resources from contributions and grants,and are subject to the rules of the AICPA Not-for-Profit Guide.

Not-for-profit health care entities are distinguished from voluntary health and welfare organizations in the following manner:

The difference between accounting for private not-for-profit hospitals and government- owned hospitals is:

The AICPA Audit and Accounting Guide: Health Care Organizations applies equally to private not-for-profit and investor-owned but not governmentally owned health care organizations.

The cash flow statements of health care organizations,both private and government-owned,may use the direct or indirect method.

Both governmental owned and private health care providers use the accrual basis of accounting and the economic resources measurement focus.

St.Martha's Hospital,a private not-for-profit,began the year 2014 with the following trial balance: Transactions for 2014 are as follows: (a)Collected $340,000 of the Patient Accounts Receivable that was outstanding at 12-31-2013.Actual contractual adjustments on these receivables totaled $152,000. (b)The Hospital billed patients $2,350,000 for services rendered.Of this amount,7% is expected to be uncollectible.Contractual adjustments with insurance companies are expected to total $831,000.(Hint: use an allowance account to reduce accounts receivable for estimated contractual adjustments). (c)In 2013 the Hospital had received a contribution of $240,000 to purchase new ultrasound equipment.The equipment was purchased for $300,000 in 2014. (d)Charity care in the amount of $60,000 (at standard charges)was performed for indigent patients. (e)The Hospital received $700,000 in securities to establish a permanent endowment.Income from the endowment is unrestricted. (f)Other revenues collected in cash were: gift shop $11,000 and cafeteria $33,000. (g)The Hospital received in cash unrestricted interest income on endowments of $5,000.Unrealized gains on endowment investments totaled $7,000. (h)Expenses amounting to $1,120,000 for Professional Care of Patients,$310,000 for General Services,and $190,000 for Administration were paid in cash. (i)Depreciation on fixed assets,including the ultrasound equipment,totaled $124,000 for the year.($90,000 for Professional Care of Patients,$18,000 for General Services,and $16,000 for Administration.) (j)Closing entries were prepared. Required: A.Record the transactions described above. B.Prepare in good form,a Statement of Operations for the year ended December 31,2014 C.Prepare in good form,a Statement of Changes in Net Assets for the year ended December 31,2014.

According to AICPA Health Care Guide,which of the following should not be included in the determination of a performance indicator for a health care organization?

For accounting purposes,health care organizations include HMOs and individual medical practitioners,as well as hospitals.

Private sector,not-for-profit health care organizations have a category of assets called "Assets Whose Use is Limited." That category refers to:

The AICPA Audit and Accounting Guide: Health Care Organizations applies equally to private not-for-profit,governmentally owned,and investor-owned health care organizations.

Patient Service Revenue of hospitals is to be presented net of contractual adjustments in the Statement of Operations.